Major tariff changes likely to protect local industries, boost domestic production

The FY2026-27 budget, scheduled to be placed in parliament today (11 June), is expected to bring wide-ranging changes to the import duty and tax structure to support local industries, encourage import-substitute production and improve the competitiveness of domestic manufacturers, according to finance ministry and National Board of Revenue (NBR) sources.

The expected measures include duty relief on raw materials for several industries, alongside higher import duties on a range of products to protect local producers.

Under the proposals, the existing 45% supplementary duty on imports of float glass – a key raw material used in the production of washing machines, electric ovens and microwave ovens – may be fully withdrawn.

The proposal also seeks to extend existing concessional and duty exemption facilities on raw material imports used in the production of LPG cylinders, auto tanks, valves and bungs until 30 June 2027.

In another move, the existing 10% supplementary duty on imports of synthetic woven fabrics may be withdrawn.

Overall, these expected measures aim to strengthen protective tariff support for local industries while reducing production costs through duty concessions on essential raw materials.

Abul Kasem Khan, chairperson of Business Initiative Leading Development, told TBS that rational reductions in duties and taxes help encourage local production and improve industrial competitiveness.

"When the government reduces duties on raw materials and inputs used in value-added production, it creates positive impacts on local industries, employment generation and the broader economy," he said.

Bangladesh needs a business-friendly tariff structure to support industrial growth and attract new investment amid current economic realities, he said.

"These expected measures will boost entrepreneurs' confidence and encourage production expansion. We hope to see such measures reflected in the budget," he added.

Protection for gypsum board, resin, transformers

To protect the local gypsum board and sheet manufacturing industry, a new 20% regulatory duty has been proposed on imports of those products.

The proposal also includes raising the existing 5% import duty on PVC resin (polyvinyl chloride) and PET resin (polyethylene terephthalate) to 10% to support domestic manufacturers.

Domestic producers say the measures would help reduce reliance on imports and encourage investment and production expansion in local industries.

To strengthen the domestic transformer industry, the government is also considering increasing the import duty on transformers with capacities of up to 1kVA from 10% to 25%, along with a new 5% regulatory duty.

Higher duties on appliances, bicycle parts

To protect the local washing machine industry, a new 20% supplementary duty has been proposed on imports of all types of household washing machines.

The proposal also recommends increasing the import duty on freewheels, a locally produced bicycle component, from 15% to 25%, along with an additional 5% regulatory duty to protect the domestic market.

Protective measures for paper, copper, steel industries

To support local paper manufacturers, import duty on greaseproof paper and glassine paper may be increased from 10% to 25%, with an additional 5% regulatory duty.

The proposal also includes a 10% regulatory duty on imported copper wire and an increase in import duty on copper tubes from 15% to 25%.

A further 10% regulatory duty may be imposed on imports of cold-rolled and coated coil sheets to protect domestic manufacturers.

Lower duties on industrial raw materials

Import duty on five raw materials, including ball clay, a key input for the refractory cement industry, may be reduced to 5%.

The proposal also includes a 1% import duty on linear alkyl benzene (LAB), one of the main raw materials used in detergent production.

Import duty on five raw materials used by the local float glass industry may be reduced from 25% to 15%.

To encourage domestic coffee processing, the government may fully withdraw the existing 5% regulatory duty on bulk imports of coffee extract, essence and preparations.

Higher duties for maize starch, motors and polyester

Import duty on maize starch may be increased from 15% to 25% to support local producers.

A new 10% regulatory duty may be imposed on imported DC motors with capacities below 1,200 watts to strengthen local manufacturing.

The proposal also includes a 5% duty on imports of polyester staple fibre to encourage domestic production of the import-substitute product.

Benefits for tyre, beauty product manufacturers

The government is considering concessional import facilities for two raw materials used by local tyre and tube manufacturers.

For skincare and beauty product manufacturers, the existing 30% supplementary duty on imports of two raw materials may be reduced to 10%.

New concession notification

The government is also considering issuing a new notification on concessional import facilities for industrial raw materials to support industrial expansion and job creation.

Hospitals, universities and other public service institutions may also receive advance tax exemption facilities on imports of capital machinery and spare parts similar to those available to manufacturing industries. Officials expect the move to help reduce costs in the health and education sectors.

Duty benefits for ETP chemicals, coal imports may continue

To encourage environmentally friendly industrialisation, the government is considering extending the existing duty exemption facility on imports of chemicals used in effluent treatment plants (ETPs) until 30 June 2027.

The proposal also seeks to continue existing duty and tax concessions on coal imports for power plants until 30 June 2030.

Md Shaheen Ahmed, president of the Bangladesh Tanners Association (BTA), told TBS that continuing the duty exemption on ETP-related chemicals would help reduce environmental management and operating costs for industries, making it easier to maintain production in line with environmental regulations.

He said the measure could encourage environmentally friendly investment, particularly in leather and other export-oriented industries.